Depsite how critical they are to getting what you want (paid), contracts often create alot of uncertainty for freelancers. The biggest points of confusion are always surrounding money. Let’s look at how to buff up your contract to protect you from late, or non-paying clients.
First and foremost, the most important thing to include are the parts that talk about how you’ll get paid. Unfortunately, a lot of young freelancers feel guilty about asking for money. When you first start out, it’s difficult to grasp the true value of your work. After your first couple of projects, you’re able to step back and look at how much time was dedicated, what the client got out of it, and what it awarded you in the end. The result is usually “I’m charging too little,” or, “I’m not being paid how I’d like to be paid.”
All of these problems can be solved with additions (or edits) to your contract. Below are some of the important clauses to include.
Outline what your rate is and how it works. It’s common to price out work based on a day rate and require all work to be scoped out to require at least one full day of work (8 hours). Anything after the first day should be booked in at least half day (4 hour) chunks. The reason to include this is both a form of protection and a heads up to the client. While you hopefully explained your fee up front, this acts as a confirmation to the client that this is your rate and it will not change. As a freelancer, you have the unfortunate disposition of being less trustworthy than a big agency. Including your payment information helps you to be transparent and comfort your client.
Work is Shipped Upon Final Payment
Boy will this bunk a lot of history. Traditionally, the service industry (especially in connection to larger, corporate entities) has a habit of paying after the fact. Meaning, “you do the work for us now and we’ll pay you when we’re ready,” somewhere to the tune of 30-60 days after the work is complete. This is a real bummer for freelancers. You have to eat, pay your bills, and nurture your business. Sadly, this can’t be achieved with delayed payments. To avoid the problem altogether, it’s common to include a clause that begins with:
Before any work is delivered at the end of a project, your account must be paid in full. Final payment is due net fifteen (15) days from the designated end of the project.
This does two things. It gives the client 15 days to pay their bill in full. It also covers me, stating that no work will be shipped until the account is paid up. A lot of you reading this just shuddered at the idea, but it works. The majority of clients (read: not shady) will need the work you’ve done for them and will forgo the 15 days and pay right at the end of the project. If you’re afraid to try it, look at it from the angle of respect. If your client respects you and your work, they’ll have no problem paying you promptly.
Copyright is Assigned Upon Final Payment
This is one a lot of people overlook, but it’s a big one. When all is said and done, the copyright, or, ownership of the work is your lynchpin. If you’re in a jam and a client hasn’t paid, retaining the copyright until they pay in full puts them in a unique position.
For individuals this will mean less, but for established companies, there’s no room for loose ends like the ownership of something with their name on it. It may seem slimy, but in reality it’s a tool that you can use to protect yourself. If you haven’t been paid in full, you retain full rights to the work. Plain and simple.
Include a Payment Schedule
It’s not fair to demand money from your clients and not tell them when they’re required to pay it. The worst thing you can do is to keep the discussion of money silent until the end of the project. Be very up front about when you require payments and for how much. Depending on the size of a project, I like to split up payments into chunks. An example three month project would run like so:
- Down Payment – 25% of total fee due before the project starts
- Halfway Payment – 50% of the project due at the halfway point (1.5 months in this example)
- Final Payment – 25% due at the end of the project, with a 15 day grace period
Before the project starts, you’re clearly outlining what the client needs to pay to keep the project moving forward. It’s also smart to include how you accept money (i.e. how the client can pay). Add something in like “I accept all major credit cards, PayPal, and check.” Tailor this to your own setup, of course, but help to answer any potential questions the client may have about how to pay you.
Have Additional Documents Ready
Part of running a business is having all of your ducks in a row. When you’re getting started, this will frustrate you to no end. There’s a lot bureaucracy in the world and unfortunately, the topic of money is highly susceptible to it. As a business, you’ll want to have all of your payment information on hand. Make sure to fill out a W-9 (in the U.S. this is what the IRS uses as a standard form of identification for a business/entity) and keep it in your files. Also, know your banking information – things like your routing and account number are good to keep nearby in case a client asks to do a wire transfer.
Don’t be afraid to ask for money. If you’re doing the work – and you’re doing it well – you should get paid for it. Be honest and forthcoming with your clients – don’t be a snake – and take care of yourself. Including the above suggestions will help to protect you from unfortunate situations and further improve the professional image of your business and yourself.